Bernanke Unraveled………..technical Gold Update at 1:30 PM CDT
It is fun to read what the analysts believe the Fed said in its statement yesterday. The pundits seem to have the answer before they read the statement. Much of this is due to the “Helicopter Ben” legacy and all of his research on the 1930’s depression. So now I read that QE3 is a done deal, just a matter of time. I didn’t read that, I read the admission that the economy will probably stay depressed through 2013 and they might not have it right with three governors dissenting.
Here is my take away of the meeting and what it means for you as a citizen and investor over the next two years.
1) First the Fed basically said nothing about what they are going to do, primarily because they are out of ammo and the Washington mood is not in the direction of inflating the economy through speculation again.
2) So the Fed is going to keep interest rates low, by inference bond yields low, until things improve. OK, what is new here?
3) Stock traders read this to mean that with bond yields low, money will flow to stocks. (That should be a good idea for about three days and I actually got a little long when the market sold down after the statement)
My conclusion, between the coming elections and the fact that funny money is out of style, the markets are going to wander over the next year. The highs and lows for the year to date are most likely in place to contain the distribution process. The only real action now will be in the dollar and gold. Gold will head lower and if I had to pick a number that stands out as support I would pick $ 1120 an ounce.
A trade of 1769 indicates to me to add to short gold positions, ie, move up to 30 % short in aggressive portfolio. This is a technical add to a fundamental macro trade.